There’s a reason why Walgreen wants to tear down the historic Jacksonian Apartment building on West End Avenue:
It’s location. Location. Location.
Like other drugstore chains, observers say, Walgreen is pressed by lower profit margins in its standard pharmacy operations. To boost sales, the chains have embarked on rapid expansion plans. The result is what seems to be drugstores falling from the sky.
All the national chains are “in a major, major push,” Russell Morris III, developer of the controversial plan for a Walgreen at the corner of West End and 31st Avenues, said last week. “I’m currently doing several.”
Nationwide, observers say, Eckerd, Walgreen, Rite-Aid, and CVS/Revco are the four companies most aggressively seeking new locations for their retail operations. According to Morris, the companies are most interested in opening their new stores in freestanding buildings, rather than the strip retail developments that they often share now with other tenants. The theory is that. if the drugstore is the only business on the site, its visibility substantially increases.
Morris said the pharmacy companies also favor locations on corners with traffic lights. Streets with high traffic counts and high population density also make for desirable locations, he said.
In recent weeks, Walgreen has announced plans to build a store on the site of the Jacksonian Apartments on West End Avenue. Now it appears that the company also plans to open a store on the property formerly occupied by Pargo’s restaurant on West End near St. Thomas Hospital.
Another Walgreen store is now under construction in Green Hills to replace the one currently located in the Mall at Green Hills. A Walgreen is being built near Nashboro Village in Antioch, and a new store has opened in Fieldstone Farms in Williamson County.
Massive changes in the healthcare industry have rocked the pharmaceutical retail business in recent years. “Managed care and other things in the marketplace have driven margins on prescriptions significantly lower than they’ve ever been before, in terms of real dollars and percentages,” explained Baeteena Black, executive director of the Tennessee Pharmacists Association. “Therefore, anyone who’s in the business of filling prescriptions has had to manage that business carefully and has had to look for efficiencies because of the decreased dollars.”
Pressed by such business demands, Morris said, it is only natural that companies would seek prime store locations. “They see dramatic sales when they go to free-standing corners, which is why they’re doing it,” Morris said.
Buy drugstores may also be relocating because they are doing more than merely dispensing pills. According to Phil Schneider, director of public affairs for the National Association of Chain Drugstores, the industry is clearly in an “expansionist mode,” because consumers now have a “desire to consolidate as many trips as possible into one stop.”
According to Schneider, “Today’s busy consumer in one stop can get some cold medicine and at the same time get some light bulbs or milk or bread. That’s a major reason why you’re seeing them locate from malls and strip malls to freestanding locations with drive-through locations.”
Metro Council member David Kleinfelter, who is boycotting Walgreen because of his opposition to the planned demolition of The Jacksonian, says his own non-scientific research suggests that the glut of Walgreens will result in overkill. He notes that, once all the planned Walgreen stores are in business, the Walgreen proposed at the Pargo’s site would be within two miles of three other Walgreen stores.
“Folks have contacted me, and I agree with them, that there’s no need for that many Walgreens in a two-mile radius,” Kleinfelter said.
